1. Economic Highlights Presentation
2nd Quarter 2013
( As of July 1th)
STATE OF ISRAEL
MINISTRY OF FINANCE
Chief Economist Department – Research, State Revenue & International Affairs
In any case of information derived from sources external to the Ministry of
Finance, such sources are mentioned at the bottom of each item
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Table of Contents
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
3. 3
Economic Figures
*Using a periodic average exchange rate.
** For available months
Criteria 2011 2012 2012 Q2 2012 Q3 2012 Q4 2013Q1 2013Q2
GDP
(Current prices in $B)*
243.9 240.9 60.5 59.8 60.8 63.8 -
Real GDP growth rate
(% change)
4.6% 3.2% 2.6% 2.8% 2.6% 2.7% -
GDP per capita
(Current $)
31,419$ 30,476$ 7,685$ 7,547$ 7,643$ 7,893$ -
GDP per capita growth rate
(%, 2005 prices)
2.7% 1.3% 0.9% 0.9% 0.5% 0.9% -
Exports (goods & services), $B*
(As % of GDP)
91.0
37.3%
90.1
37.4%
24.0
39.6%
21.9
36.7%
22.4
36.7%
22.5
35.2%
-
Imports (goods & services), $B*
(As % of GDP)
92.2
37.8%
92.7
38.5%
23.7
39.1%
23.0
38.4%
21.7
35.6%
21.5
33.6%
-
Unemployment rate** 7.1% 6.9% 6.9% 6.8% 6.8% 6.6% 6.9%
Sources: CBS, IMF
4. 4
Economic Figures
Criteria 2007 2008 2009 2010 2011 2012
Public debt
(As % of GDP)
78.6% 77.4% 79.6% 76.3% 74.0% 73.2%
General government expenditure
(As % of GDP)
45.2% 44.3% 44.5% 43.8% 43.4% 43.4%
Current account surplus
(As % of GDP)
3.2% 1.4% 4.1% 3.3% 1.3% 0.4%
Inflation rate
(CPI, yearly average, % change)
0.5% 4.6% 3.3% 2.7% 3.5% 1.7%
Budget deficit
(As % of GDP)
0.0% 2.2% 5.1% 3.7% 3.3% 4.2%
* MoF Estimates
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Table of Contents
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
7. 7
GDP Growth
Israel compared to advanced economies, annual rate of change, constant prices
Source: CBS, OECD Stat
Since 2004, Israel’s growth rate has exceeded the average growth rate of advanced economies.
In 2009, as most of the world experienced a decline in GDP, Israel experienced a 1.1% growth in it’s GDP.
1.5%
4.9% 4.9%
5.8% 5.9%
4.1%
1.1%
5.0% 4.6%
3.1%
3.8%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
OECD Euro Area U.S Israel
* MoF forecast, Euro stat and OECD forecast
8. 8
GDP Components
Real Annual Percentage Change
1.6% 1.9%
5.3%
3.8%
2.7%2.4% 2.6% 2.9% 2.9%
3.4%
4.6%
-3.1%
12.2%
16.0%
4.0%
7.1%
-12.3%
13.5%
5.5%
0.1%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Private Consumption
Public Consumption
Investment in Fixed Assets
Exports of Goods and Services
Effects of the global
economic crisis
9. 9
GDP per Capita
$ U.S, Current prices, Current PPP, 2012
Additional Sources: OECD
35.0
28.0
0
10
20
30
40
50
60
70
80
90
100
10. 10
Output Gap
As percentage of Potential GDP, 2012
Additional Sources: OECD Estimates
1.4%
-2.9%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
Israel
Poland
SlovakRepublic
Chile
Canada
Norway
Mexico
Finland
Germany
Sweden
Estonia
Korea
Australia
Switzerland
Belgium
Luxembourg
Turkey
Japan
UnitedKingdom
NewZealand
Austria
CzechRepublic
OECD
Netherlands
France
Slovenia
Denmark
UnitedStates
Euroarea
Hungary
Italy
Iceland
Portugal
Ireland
Spain
Greece
The actual - potential GDP Difference.
Positive index means that actual output is higher than potential.
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
13. 30.2% 30.2% 30.5%
28.6%
24.0%
25.9% 26.3% 25.5%
12.6% 12.6% 12.2%
11.9%
11.0%
11.3% 11.0% 11.9%
0%
10%
20%
30%
40%
50%
2005 2006 2007 2008 2009 2010 2011 2012
Services
Goods
13
Exports of Goods and Services
As a share of GDP
Effects of the global
economic crisis
14. 14
Main Trading Partners
$ US Billions, 2012
19.3
8.0
3.7 3.3 3.0
2.1 2.0 1.8 1.5 1.3
0
5
10
15
20
25
Exports
* The data on trade with Hong-Kong is added to the data regarding China
Source: Central Bureau of Statistics
8.7
7.3
4.5 4.6
4
3 2.8 2.7
2.4
2.1
0
1
2
3
4
5
6
7
8
9
10 Imports
15. 15
Main Export Destinations
As a share of total exports
Source: Central Bureau of Statistics
32.1% 32.3% 34.7% 34.0%
37.9%
19.9%
23.6%
24.3% 25.2%
24.6%
36.8%
33.5% 30.4% 29.8%
27.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013*
North America Asia Europe
* Relates to January-April 2013
16. 16
Current Account Surplus
As % of GDP
1.2%
2.3%
3.1%
4.8%
3.2%
1.4%
4.1%
3.3%
1.3%
0.4%
0%
1%
2%
3%
4%
5%
6%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Central Bureau of Statistics
17. 17
Foreign Investments
$ US Billions
4.3
10.4
7.9
27.1
14.4
10.8 10.8
18.2
7.0
2.3
3.3 2.9
4.8
15.3
8.8
10.9
4.4
5.5
10.8
9.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2003 2004 2005 2006* 2007 2008 2009 2010 2011 2012
Total Investments Direct Investments
* In 2006, a large acquisition by Teva Pharmaceutical Industries Ltd. was included in the data.
Source: Central Bureau of Statistics
20. 20
Israel’s Free Trade Agreements
QIZ Agreements1985
1993
1997
1997
2000
2000
2007
USA
EFTA
Turkey
Canada
Mexico
European Union (Association Agreement)
MERCOSUR
2004
1998
Egypt
Jordan
More comprehensive information is available on the Israel Ministry of Finance website
22. 22
Bilateral Investment Treaties
*Comprehensive information is available on the Israel Ministry of Finance website
South Africa*
Thailand
Slovakia
Slovenia*
Serbia
Poland
Romania
Montenegro
Turkey
Turkmenistan
Ukraine*
Uzbekistan
Uruguay
23. 23
Economic Organizations
Membership in main international economic organizations
Israel is a member of leading international economic organizations:
• United Nations Organizations
• United Nations Agencies
• World Bank Group
• International Monetary Fund
• OECD
• Regional Organizations
• Inter-Governmental Organizations
More comprehensive information is available on the Israel Ministry of Finance website
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
25. 25
Unemployment and Participation
As % of total labor force
9.1% 8.7%
8.3%
8.3%
8.1%
7.6%
7.0%
7.0% 6.8% 6.9% 6.9%
6.8%
6.8%
6.6%
6.9%
62.0%
61.9%
62.4%
62.9%
62.9% 62.7%
62.7%
62.7%
62.6%
62.8%
63.6%
64.1%
63.7%
63.7%
63.7%
60%
61%
62%
63%
64%
65%
5%
6%
7%
8%
9%
10%
2009
Q4
2010
Q1
Q2 Q3 Q4 2011
Q1
Q2 Q3 Q4 2012
Q1
Q2 Q3 Q4 2013
Q1
Q2*
Unemployment Rate
Participation in the Labor Force
Source: Central Bureau of Statistics
Since the 2nd quarter of 2009 unemployment is relatively decreasing, with a gradual increase in the
participation rate since the beginning of 2010.
*Available data.
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
30. 30
General Government Expenditure
As % of GDP
48.5%
46.6%
46.1%
45.2%
44.3%
44.5%
43.8%
43.4% 43.4%
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
Source: Central Bureau of Statistics
31. 31
General Government Tax Burden
As % of GDP
35.6%
35.8%
36.1%
36.5%
33.9%
31.5%
32.6%
32.8%
31.7%
30%
31%
32%
33%
34%
35%
36%
37%
OECD countries average: 33.8%
(2011 average)
Source: Central Bureau of Statistics, OECD
32. 32
General and Central Budget Deficit
As % of GDP
3.5%
1.8%
0.9%
0.0%
2.2%
5.2%
3.7%
3.3%
4.2%
4.2%
2.6%
1.2%
0.6%
2.6%
5.6%
3.7%
3.3%
4.5%
0%
1%
2%
3%
4%
5%
6%
Central Government
General Government
33. 33
Public Debt
As % of GDP
93.9%
85.1%
78.6%
77.4%
79.6%
76.3%
74.0%
73.2%
70%
75%
80%
85%
90%
95%
100%
Effects of the global
economic crisis
34. 34
Public Debt
As % of GDP, international comparison
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
220%
240%
Japan
Greece
Italy
Portugal
Iceland
Ireland
UnitedStates
OECD
UnitedKingdom
France
Belgium
Euroarea
Spain
Germany
Hungary
Canada
Austria
Netherlands
Israel
Poland
Finland
Denmark
Slovenia
SlovakRepublic
NewZealand
CzechRepublic
Sweden
Norway
Switzerland
Korea
Luxembourg
Australia
Estonia
2007 Debt to GDP Ratio Change from 2007 to 2012
Israel:
78.2% (2007)
73.2% (2012)
OECD average:
74.2% (2007)
108.7% (2012)
Source: OECD
35. 35
Israel’s Credit Ratings
Overseas Bonds
Forecast
Domestic Bonds
TermRating Firm
RatingRating
A1
Stable
A1Long
Moody's
P1-Short
A+
Stable
A+Long
Standard & Poor's
A-1A-1+Short
A
Stable
A+Long
Fitch
F1-Short
Updated to mid-September, 2012
1996 1998 2000 2002 2004 2006 2008 2010 2012
Moody's
S&P
Fitch
A1/A+
A2/A
A3/A-
Baa1/BBB+
Aa3/AA-
Nov 2007
S&P upgrades
Israel To A
April 2008
Moody’s upgrades
Israel To A1
Sep 2011
S&P upgrades
Israel To A+
Feb 2008
Fitch upgrades
Israel To A
36. 36
Avoidance of Double Taxation
More comprehensive information is available on the Israel Ministry of Finance website
Austria
Belarus
Belgium
Brazil
Bulgaria
Canada
China
Croatia
Czech Republic
Denmark
Estonia
Ethiopia
Finland
France
Germany
Greece
Hungary
India
Ireland
Italy
Jamaica
Japan
Latvia
Lithuania
Luxembourg
Georgia
37. Avoidance of Double Taxation
More comprehensive information is available on the Israel Ministry of Finance website
Moldova
Norway
Philippines
Portugal
Poland
Romania
Russia
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sweden
Switzerland
Thailand
Netherlands
Turkey
Ukraine
UK
Uzbekistan
USA
Taiwan
Vietnam
Mexico
South KoreaPanama
37
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Foreign Trade and Balance of Payment
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
39. 39
Inflation Rate
Rate of change in consumer price index
2.39%
-0.10%
3.40%
3.80%
3.91%
2.66%
2.17%
1.63%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Dotted lines represent BoI Inflation
Target range
Source: Central Bureau of Statistics
40. 40
-2%
0%
2%
4%
6%
8%
10%
12%
14%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Real Interest Rate Nominal Interest Rate Inflation Expectaions
Interest Rate
Source: Bank of Israel
44. Industrial Export
Current U.S. $ Billions, and the share of high tech and mid high tech sectors in the Israeli goods exports
44
0
5
10
15
20
25
30
35
40
45
50
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
High Tech
Low Tech
73.2% 72.5%
75.3%
75.4%
76.3%
76.7%
77.4%
80.9%
80.3%
80.1%
79.5%
Source: Central Bureau of Statistics
80.6%
* 2013 available months at annual rate
45. 4.4
1.8
1.4
3.9
2.8
2.3
2.0
1.8
1.9
1.8
1.7
1.6
1.3
0
1
2
3
4
5
Israel
Finland
Germany
France
Belgium
EU27
Canada
UnitedKingdom
Ireland
Norway
CzechRep.
Spain
Italy
45
Israel is a World Leader in Science,
Technology, and Innovation
Source: OECD Science, Technology and Industry Scoreboard 2011. * International Institute for Management Development (IMD) Global Competitiveness
Yearbook 2011. ** World Economic Forum (WEF) Global Competitiveness Report 2012-2013.
Civilian R&D as % of GDP, 2009
1st in R&D expenditure as % of GDP*
1st in quality of scientific research institutions**
1st for entrepreneurship being widespread amongst its managers*
2nd in public expenditure on education*
3rd in venture capital availability**
4th in PCT patents applications per million population**
5th for strength of investor protection**
6 Israelis in the last 10 years have been awarded Nobel Prizes in
the fields of Economics or Chemistry
2013-2012Global Competitiveness Report
“The country’s main strengths remain its world-class capacity for innovation
(3rd), which rests on highly innovative businesses that benefit from the presence
of the world’s best research institutions geared toward the needs of the business
sector. Israel’s excellent innovation capacity, which is supported by the
government’s public procurement policies, is reflected in the country’s high
number of patents (4th). Its favorable financial environment, particularly evident
in the ease of access to venture capital (3rd), has contributed to making Israel an
innovation powerhouse..”
46. The Institute for Management
Development ranked Israel 19th out of
59 countries for 2012.
Israel has been ranked 1st at
entrepreneurship and 9th at economy
resilience.
Israel in IMD Rankings
IMD World Competitiveness Yearbook 2013
Source: IMD World Competitiveness Yearbook 2013
46
78.187
78.210
79.150
79.591
80.513
83.145
83.158
83.305
83.514
85.193
85.505
86.197
88.439
89.128
89.585
89.857
90.531
92.783
93.357
100.000
0 10 20 30 40 50 60 70 80 90 100
(2) USA 1
(17) Finland 20
(19) Israel 19
(18) United Kingdom 18
(20) Ireland 17
(15) Australia 16
(14) Malaysia 15
(11) Netherlands 14
(12) Luxemburg 13
(13) Denmark 12
(7) Taiwan 11
(10) Qatar 10
(9) Germany 9
(16) UAE 8
(6) Canada 7
(8) Norway 6
(4) Singapore 5
(5) Sweden 4
(1) Hong Kong 3
(3) Switzerland 2
47. Israel’s ranking compared to other IMD countries,
Business Efficiency and Infrastructure
Israel’s ranking compared to other IMD countries,
Economic Performance and Government Efficiency
Israel in IMD Rankings
IMD World Competitiveness Yearbook 2012
Source: IMD World Competitiveness Yearbook 2012
47
48. Israel in WEF Rankings
World Economic Forum Global Competitiveness Index 2012-2013
Source: World Economic Forum Global Competitiveness Index 2012-2013
The World Economic Forum ranked Israel 26th
out of 144 countries for 2012-2013 in terms of
competitiveness.
The Forum also ranked Israel:
1st in Quality of scientific research institutions
3rd in Venture capital availability
4th in PCT patents, applications/million pop.
5th in Strength of investor protection
5th in Firm-level technology absorption
6th in Capacity for innovation
6th in Company spending on R&D
And 8th in University-industry collaboration in
R&D
48
49. 49
Cooperation in Industrial R&D
More comprehensive information is available on the Israel Ministry of Finance website
North America
New York
Massachusetts
Maryland
Virginia
Wisconsin
Colorado
Illinois
Oregon
BIRD (Foundation)
Ontario CIIRDF (Foundation)
South America
Argentina
Uruguay
Brazil
Australia
(Victoria)
Europe
France
Russia
Italy ( and Trento county)
Germany
Greece
Czech Republic
Bulgaria
Lithuania
Slovenia
Denmark
Hungary
Turkey
Portugal
Finland
Sweden
Ireland
Spain
Cyprus
Netherlands
* Through EUREKA (40 country Multilateral
Initiative)
Asia
China (Shanghai, Jiangsu,
Shenzhen, Federal)
India
SIIRD-Singapore (Foundation)
KORIL-RDF-Korea (Foundation)
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Foreign Trade and Balance of Payment
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
51. Learn More
51
Visit the Israel Ministry of Finance English
website for more information:
Economic Overview of Israel
Other publications and reports on the Israeli economy
Ministry of Finance publications and reports
About the Ministry
Ministry press releases
52. Learn More
52
Bank of Israel
Ministry of Foreign Affairs
Ministry of Industry, Trade and Labor
Israel Central Bureau of Statistics
Israel Government Portal
Click to open:
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Foreign Trade and Balance of Payment
Labor Market
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Price Stability and Monetary Policy
Table of Contents
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9 Contact
54. Contact
54
Mr. Roni Hershkovitz
Mr. Ori Kaufman
Dr. Amichai Fishler
Overseas Economic Information
Economics and State Revenue
Department
Ministry of Finance
State of Israel
Write us an email
ronihe@mof.gov.il
orik@mof.gov.il
amichai@mof.gov.il
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